What Is a Charitable Gift Annuity and Why Are More Donors Choosing One?

Many people want to make a meaningful charitable gift but also wonder how it might fit into their retirement plans. A charitable gift annuity, also known as a CGA, offers an opportunity to do both.

Through the Community Foundation of Herkimer and Oneida Counties, donors can make a gift that provides guaranteed income for life while leaving an impact on the organizations and causes they care about. Below are answers to some of the most common questions about charitable gift annuities.

What is a charitable gift annuity?
 
A charitable gift annuity is a planned giving structure that allows donors to make a charitable contribution while receiving fixed payments for the rest of their lives.

When a donor establishes a charitable gift annuity, they make an irrevocable gift to the Community Foundation. In return, they receive guaranteed lifetime payments. After the donor's lifetime, the remaining balance supports one or more charitable organizations or funds selected by the donor.

"It's really a blended gift," says Nick Grimmer, Chief Development Officer at the Community Foundation. "You're making a charitable contribution, but you're also creating a reliable stream of income for yourself during retirement."

For many donors, that combination makes charitable gift annuities an attractive option because they don't have to choose between supporting a cause they love and maintaining financial stability.

How does a charitable gift annuity work?

Charitable gift annuities can be funded with cash, appreciated securities, real estate, and, in certain cases, IRA qualified charitable distributions (QCDs).

Once a charitable gift annuity is established, the payment amount is fixed for life. Payments are based on the donor's age using rates recommended by the American Council on Gift Annuities.

Because the payments never change, many donors appreciate the predictability they provide.

The Community Foundation handles every aspect of administering the annuity, including managing investments, issuing payments through direct deposit and providing annual tax reporting.

"Our job is to make the process simple," Grimmer says. "We take care of the administration so donors can focus on the reasons they wanted to make the gift in the first place."

Who should consider a charitable gift annuity?

Charitable gift annuities are often a good fit for individuals who want dependable lifetime income while creating a lasting charitable legacy.

Some donors appreciate the guaranteed payments during retirement. Others are motivated by the opportunity to support a favorite nonprofit or establish a permanent charitable fund after they're gone. Many choose a charitable gift annuity because it helps accomplish both goals at the same time.

Grimmer says the best place to start is simply having a conversation.

"Every donor's situation is different," he says. "We can explain how charitable gift annuities work and help people determine whether they're the right fit for their personal and charitable goals."

Working alongside financial and tax advisors, the Community Foundation helps donors explore options while building a giving plan that reflects what matters most to them.

Learn more at foundationhoc.org/cga.